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  1. #1

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    Six Flags announces that there is 'Substantial Doubt' that it will survive

    Six Flags announced recently that the death knell may be tolling for one of the world's largest theme park chains.

    This story can be found at: Six Flags says there is 'substantial doubt' the chain will survive

    Six Flags says there is 'substantial doubt' the chain will survive


    By Robert Niles

    Published: March 11, 2009 at 8:24 PM

    Six Flags today told the U.S. Securities and Exchange Commission, in essence, if we can't restructure our debt before we have to make more than $300 million in payments this summer, we're going bankrupt.

    Here are the notable quotes from Six Flags' most recent 10-Q statement, filed on the SEC website:
    We have had a history of net losses. Our net losses are principally attributable to insufficient revenue to cover our relatively high percentage of fixed costs, including the interest costs on our debt and our depreciation expense. We also have an accumulated stockholders' deficit of $443.8 million at December 31, 2008. Additionally, our Preferred Income Equity Redeemable Shares ("PIERS") are required to be redeemed in August 2009, at which time we are required to redeem all of the PIERS for cash at 100% of the liquidation preference ($287.5 million), plus accrued and unpaid dividends ($31.3 million assuming dividends are accrued and not paid through the mandatory redemption date). Given the current negative conditions in the economy generally and the credit markets in particular, there is substantial uncertainty that we will be able to effect a refinancing of our debt on or prior to maturity or the PIERS prior to their mandatory redemption date on August 15, 2009.
    ...Accordingly, we have stated in our financial statements included herein that there is substantial doubt about our ability to continue as a going concern unless a successful restructuring occurs. ...We may be compelled to seek an in-court solution in the form of a pre-packaged or pre-arranged filing under Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq., as amended ("Chapter 11") if we are unable to successfully negotiate a timely out-of-court restructuring agreement with the PIERS holders, common stockholders and our creditors.
    In English, that means bankruptcy. 'Cause at this point, with all the nation's major banks essentially insolvent, Six Flags has about as much chance of refinancing as you do winning one of those big stuffed animals with a single coin toss on a Six Flags midway. Scratch that, your chances of landing the four-foot Tweety Bird are better.
    Six Flags currently maintains 21 properties located throughout North America, including theme parks, water parks and family entertainment centers.
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  2. #2

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Wonder what happens to all my shares of the company if this happens?

    "The moose say's you're closed, i say you're open" Clark W. Griswold

  3. #3

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Sounds like they are looking for "bailout" funds...

    If a business (any business) can't run successfully, then they should close.

  4. #4

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by BroncoBob View Post
    Wonder what happens to all my shares of the company if this happens?
    You have some rather pricey toilet paper.

  5. #5

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    This was a long time coming. It was just a matter of when they would go out of business.
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  6. #6

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by BroncoBob View Post
    Wonder what happens to all my shares of the company if this happens?
    Save it and put it up on eBay in about 30 years when some may become nostalgic for Six Flags. I wouldn't bet on it though...

  7. #7

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    "Six Flags" itself may not survive, but I have little doubt that most (if not all) of the parks will.

    The flagship parks (Six Flags Magic Mountain, Six Flags Over Texas, Six Flags St Louis, Six Flags Great America (chicago), Six Flags Great Adventure (New Jersey) and Six Flags Over Georgia) will most likely be fine and remain under the "Six Flags" name.

    The smaller parks (Six Flags Fiesta Texas, Six Flags Discovery Kingdom, Six Flags America, Six Flags New England, etc) will probably be fine as well but may not be under the "Six Flags" umbrella and will be bought out. But I don't think any of the parks will actually close.

    Most of the non-flagship parks were around before Six Flags anyway. No reason to think they won't be after.


  8. #8

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    I hope Six Flags Great Adventure survives- I like the park, Its fun.
    And I agree Sir Clinks,I am sure most of the big ones will be fine and the smaller ones should be OK, just might be renamed.
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  9. #9

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by sir clinksalot View Post
    "Six Flags" itself may not survive, but I have little doubt that most (if not all) of the parks will.
    Really? I'm not nearly as optimistic. Look at what happened to Geauga Lake and Astroworld, and that was back when the company was "healthy". Times are much more desperate now, I expect at least a handful of parks will either be considered more profitable as something other than an amusement park (e.g., Astroworld) or picked over for parts by other park chains. (e.g., Geauga Lake).
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  10. #10

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    The company has never been as "healthy" as right now. The new management really turned the company around and for the first time in over 10 years, they actually made money last year! What's crushing them now are the really dumb, stupid mistakes from the late 90's-early 00's. The european division bled money like crazy and they just kept throwing money at it to try to fix it. They took tiny Walibi Flevo in Netherlands (2 rollercoasters, 2 water rides and a handful of other rides), added 5 coasters, 10 spinning rides, a mad house, etc. over 3 years and the result? The park never broke a million visitors a year! So, that was 50+ millions that went down the drain.

    Turning Geauga Lake into Six Flags Ohio was a major mistake. They put 50 millions on the park in a year, don't give any customer service and then they wonder why the park turned into a ghost town the next year. Six Flags Great Adventure had its best seasons in 1996-1997 with 3.4 million visitors. Then, lack of staffing and too many random closed rides hurt their reputation so much... that after adding something like 8 coasters, 25 rides, their annual attendance FELL to 2.7 million guests in 2008!

    Let's hope Six Flags can survive this and continue to strive in the current direction.

  11. #11

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by SpaceMTFan View Post
    The company has never been as "healthy" as right now.

    Let's hope Six Flags can survive this and continue to strive in the current direction.
    I continue wonder what people are talking about when when they say the "turn around has been successful". I don't think it's necessary to get into another park-by-park analysis, but the changes I have seen have been negligible, token, and temporary.

    Yes, they've made money, but giving away the gate to focus primarily on in-park spending and slapping sponsorship on every available surface are hardly long-term solutions.

    I don't see any reason for this horrible company to stay in business. The big parks have enough going for them that new (and independent) management might do them wonders, and hopefully the smaller parks still have enough charm left to be able to turn a profit if they get bought up. Frankly, my only concern is for the parks. If there's any way Six Flags can fail without resulting in closing parks, I'll actually be quite thrilled.
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  12. #12

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by sarki7 View Post
    I continue wonder what people are talking about when when they say the "turn around has been successful".
    Thank you!!! I can only talk about SFMM (and complain about it) and I have not seen anything successful. Sure, people will say it is cleaner than before and things have been painted, but overall, the park still is dirty and needs a lot of fixing.

    This starts by not giving the park away like you said. An annual pass should not cost one days admission. A can of Coke should not get you in for free. And I am sorry, the park is not clean. The restrooms are still gross inside, the ride queues are still dirty, trashcans overflow all day, etc........

    Sure, they are putting in Terminator roller coaster, but how long til this starts looking like crap?

    Hopefully SFMM gets sold off and another company can operate it properly. It does not need to be under the SF name.

  13. #13

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    I think when people say "turn around has been successful" they aren't just talking financially, because that would be silly.

    I think when they are talking about the company turning around, it's things like the perception of the chain, that they have indeed been able to become more family friendly. That they have in most cases REALLY cleaned up the parks.

    The difference between now and when they closed Astroworld and sold Geauga Lake is ... NOBODY is looking to buy the parks or the land they are sitting on. They aren't going to find a willing buyer. So the only alternative to keeping the parks open is just closing them outright.

    Again, I don't question this will happen to a few lower-performing parks ... but I can't see this happening to ALL of the parks, especially the flagship parks.

    I think this summer is going to be a good indicator as to the stability of Six Flags. I actually predict they are going to have a HUGE summer. People aren't travelling, Six Flags cater to the "local" fanbase of their parks. People are going to have a "Staycation" in their home-town, which means their Six Flags.


  14. #14

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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Quote Originally Posted by sir clinksalot View Post
    I think when people say "turn around has been successful" they aren't just talking financially, because that would be silly.

    The difference between now and when they closed Astroworld and sold Geauga Lake is ... NOBODY is looking to buy the parks or the land they are sitting on. They aren't going to find a willing buyer. So the only alternative to keeping the parks open is just closing them outright.
    If anything, I think the opposite is true. The turnaround HAS been financial (e.g., making a "profit" for the first time in ages). Family friendly and cleaned up the parks? Sure, things may have taken a step in the right direction as compared to the horrendous experience on a few years ago - but to say that today SF provides a high quality guest experience is still way overstating things in my opinion. Better, maybe, good - certainly not.

    I agree with your either/or assessment, but fear the outcome will be closed parks. I do no share your rosy outlook on this upcoming season, this company is circling the drain:
    In its fourth-quarter earnings report on Tuesday, Six Flags said it does not expect to have enough cash to redeem its preferred income redeemable shares, or PIERS, when they mature on Aug. 15. The shares, known as PIERS, must be redeemed for $$287.5 million plus accrued and unpaid dividends, which may total up to $$31.3 million.

    If the company defaults on its PIERS maturity, it would constitute a default that would allow its lenders to demand payment on other financial obligations.

    Six Flags said a Chapter 11 filing could occur “well in advance” of the PIERS’s maturity in August, if the company decides an out-of-court agreement is not possible or to its advantage.

    The upcoming PIERS obligation has been an ongoing concern for Six Flags investors. The company has skipped making its PIERS dividend payments since last May, noting that unpaid dividends accrue without interest.

    Last September, Moody’s Investors Services downgraded Six Flags’ corporate family and probability of default ratings to a “Caa2” junk grade, saying it did not expect the company to have enough free cash flow or credit capacity to redeem the shares.

    Moody’s also expressed concern about Six Flags’ $$131 million senior unsecured notes, which mature in February 2010.

    A Six Flags representative was not immediately available for comment on Friday.

    From: Bankruptcy possibility looms for Six Flags | ajc.com
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    Re: Six Flags announces that there is 'Substantial Doubt' that it will survive

    Of course your not going to get at "Disney" experience going to Six Flags. If your looking for it, your going to be HIGHLY dissapointed.

    I grew up with SFMM, it has ALWAYS been my "home" park. I've never lived more than 40 miles from the park and have made yearly visits from 1979 to 2007. Most years 10+ visits.

    I've seen the park go WAY up and WAY down. So far down that I haven't actually been to the park since Sept of 2007.

    Granted, I haven't actually seen the changes in the park, just pictures, but I'm going next Sunday and for the first time in YEARS I'm actually excited to go to SFMM. And I don't think I'll be dissapointed.

    You have to look at how low the parks were not 2 or 3 years ago and see where they are now. It's not an overnight process, but even people who would NEVER have thought about going to Six Flags are now saying they want to go this year.


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